ACIT, Circle-1(3), Hyderabad V. M/s. Bilasraika Sponge Iron India (P) Ltd., Hyderabad

ITA 1012/HYD/2012

• Counselvise Citation: 101222514 RSA 2012
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE KUMAR KABRA
• Assessee Lawyers: SHRI SOLGY JOSE T KOTTARAM
• Keywords: Depreciation; Revised return; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1012/HYD/12 : ASSESSMENT YEAR 2008 - 09 ASSTT . COMMISSIONER OF INCOME - TAX, CIRCLE 1(3), HYDERABAD V/S. M/S. BILASRAIKA SPONGE IRON INDIA P. LTD., HYDERABAD (PAN - AACCB 1598 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHRI SOLGY JOSE T.KOTTARAM DR REVENUE BY : SHRI KISHORE KUMAR KABRA DATE OF HEARING 16 .0 6 .2014 DATE OF PRONOUNCEMENT 09.07.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX( APPEALS) III, HYDERABAD DATED 10.04.2012 FOR THE ASSESSMENT YEARS 1008 - 09. 2. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL READ AS FOLLOWS - 1. THE O R DER O F THE CIT(A) IS ERRONEOUS IN LAW AND ON FACTS . 2. THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO CON S I D ER THE REVISED RETURN OF LOSS/UNABSORBED DEPRECIATION FOR THE A. Y . 2007 - 08 AND TO ALLOW THE SAME IN ASSESSMENT YEAR 2008 - 09 TO BE SET OFF. 3. THE CIT(A) OUGHT TO HAVE CONSIDERED THE FACTS FOR ALL THE THR E E ASSESSMENT YEARS, I.E. 2006 - 07, 2007 - 08 AND 2008 - 09 IN A HOLISTIC MANNER BEFORE GIVING A FINDING THAT UNABSORBED DEPRECIATION AROSE FOR CONSIDERATION FOR THE A.Y. 2007 - 08 ON WHICH ASSESSEE IS ELIGIBLE FOR RELIEF. 4. THE CIT( A) OUGHT TO HAVE NOTICED THAT ASSESSEE CLAIMED LOSSES THROUGH REVISED RETURN FOR THE A.Y. 2007 - 08 TO NEGATE THE ADDITION MADE ON ACCOUNT O F CREDITORS IN A.Y. 2006 - 07 AND THUS, LET TO CLAIM UNABSORBED DEPRECIATION THROUGH REVISED RETURN WHICH IS NO T A GENUI NE CLAIM. I TA NO.1 01 2 /HYD /201 2 M/S. BILASRAIKA SPONGE IRON INDIA P. LTD., HYDERABAD 2 5. THE CIT(A) OUGHT TO HAVE NOTICED THA T THE ENTIRE ACTION OF FILING REVISED RETURNS AND CLAIM OF UNABSORBED DEPRECIATION FOR THE A.Y. 207 - 08 AROSE ON ACCOUNT O F ASSESSEES ATTEMPT TO SEEK RELIEF FOR THE ADDITIONS MADE IN THE A. Y . 2006 - 07 AND HE NCE, NOT ADMISSIBLE. 6. THE CIT(A) ERRED ON FACTS AND IN LAW IN HOLDING THAT THERE IS AN ORDER OF TAHSILDAR, B ALANAGAR ON 18 - 07 - 2008 THOUGH THERE IS NO SUCH O R DER AND THE SAID LETTER IS ONLY A COMMUNICATION FROM THE TAHSILDAR TO THE COLL E CTOR, MAHABUBNAGA R. 7. THE CIT(A) ERRED IN LAW IN HOLDIN G TH A T THE PAYMENTS CRYSTALLIZED DURING F.Y.2007 - 08 ONLY THOUGH THEY ARE INCURRED AND RELATABL E TO BOTH THE F.Y. 2006 - 07 AND 2007 - 08 8. THE CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE PAYMENTS CRYSTALISED UPON PASSING OF A ORDER BY THE T A HSILDAR THOUGH IN REALITY THER E IS NO SUCH ORDER AND ADMITTEDLY THE PAYM E N T S ARE MADE BY THE ASSESSEE UPON NEGOTIATIONS WITH THE FARMERS. 9. 3. THE FIRST GRIEVANCE OF THE REVENUE COVERED BY GROUNDS NO.2 TO 5 RELAT ES TO THE DIRECTIONS OF THE CIT(A) TO CONSIDER THE REVISED RETURN OF LOSS/UNABSORBED DEPRECIATION FOR THE ASSESSMENT YEAR 2007 - 08 AND TO ALLOW THE SAME TO B E SET OFF IN ASSESSMENT YEAR 208 - 09. 4. FACTS OF THE CA S E IN BRIEF IN REL A TION TO THIS ISSUE ARE THAT THE ASSESSEE COMPANY, ENGAGED IN THE BU S IN E SS O F MANU FA CTURE O F SPONGE IRON, FILED ITS RETURN OF INCOME THROUGH E - FILING ON 30.9.2008 , ADMITTING TOTAL INCOME E OF R S .1,49,35,880. SUBSEQUENTLY , IT F IL ED A REVISED RETURN OF INCOME ON 14.2.2009 DEC LARING A TOTAL INCOME O F RS .1,32,10,300. IN TH E SAID RETURN, THE ASSESSEE CLAIMED SET OFF OF LOSS OF ASSESSMENT YEAR 2007 - 08 OF RS.17,25,582. THE ASSESSING OFFICER OBSERVED THAT THE RETURN AS FILED ORIGINALLY WITHIN THE TIME ALLOWED UNDER S.139(1) AND IT WAS NOT A RETURN OF LOSS AND THE LOSS OF R S .17,25,582 OF ASSESSMENT YEAR 2007 - 08 CLAIMED TO B E SET OFF IN TH E REVISE D RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 CAN N OT BE ALLOWED. THE ASSESSING OFFICER AC C OR D INGLY ADOPTED THE INCOME RETURNED IN THE ORIGINAL RETURN AND PROCEEDED TO COMPLETE THE ASSESSMENT . I TA NO.1 01 2 /HYD /201 2 M/S. BILASRAIKA SPONGE IRON INDIA P. LTD., HYDERABAD 3 5. ON APPEAL, THE CIT(A), AFTER REFERRING TO THE PROVISIONS OF S.139 AND THE DECISION OF GUAHATI HIGH COURT IN THE CASE OF CIT V/S. SUNDARAM D E KA V/S. CIT(210 ITR 988) IN THE LIGHT OF THE FACTS OF THE PRESENT CASE , CONCLUDED THAT THE REVISED RETURN FILED BY THE ASSESSEE IS IN ORDER, AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO CON S I D ER THE R E VI S ED RETURN FOR THE PURPOSE O F COMPUTATION OF TOTA L INCOME. HE ALSO DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM OF UNABSORBED DEPRECIATION OF ASSESSMENT YEAR 2007 - 089 AND ALLOW THE SAME ACCORDINGLY. 6. AGGRIEVED BY THE ABOVE DIRECTION OF THE CIT(A), REVENUE IS IN APPEAL ON THIS ISSUE. 7. WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. THE ISSUE FOR CON S I D ERATION IS WHETHER THE REVISED RETURN FILED BY THE ASSESSEE IN THIS CASE IS A VALID ONE OR NOT, AND WHETHER THE CIT( A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO CONSIDER THE SAID REVISED RETURN AND VERIFY AND ALLOW THE CLAIM FOR SET OFF OF UNABSORBED DEPRECIATION OF THE ASSESSMENT YEAR 2007 - 08 MADE IN SUCH REVISED RETURN. THE PROVISIONS OF S.139(5) MAKE IT C LEAR THAT A RETURN CAN BE REVISED ONLY IF SUCH RETURN IS FURNISHED UNDER S.139(1) OR IN PURSUANCE OF A NOTICE UNDER S.142(1), AND THE OMISSION WARRANTING THE FILING OF THE REVISED RETURN MUST BE BONA FIDE INADVERTENCE OR MISTAKE ON THE PART OF THE ASSESSEE , AND SUCH REVISED RETURN SHOULD BE FILED WITHIN ONE YEAR FROM THE END O F THE ASSESSMENT YEAR OR BEFORE COMPLETION OF THE ASSESSMENT . IN THE FACTS OF THE PRESENT CASE, AS EVIDENT FROM THE ASSESSMENT ORDER ITSELF, THE ASSESSEE HAS FILED THE ORIGINAL RETUR N UNDER S.139(1) AND THE R E VI S ED RETURN WAS FILED WITHIN ON E YEAR FROM THE END O F THE RELEVANT ASSESSMENT YEAR , I.E. ON 14.2.2009, I.E. BEFORE 31.3.2009, AND BY THE TIME OF THE FILING OF THE REVISED RETURN, ASSESSMENT WAS NOT COMPLETED BY THE ASSESSING O FFICER. AS FOR THE CLAIM OF THE ASSESSEE FOR SET OFF OF UNABSORBED DEPRECIATION OF ASSESSMENT YEAR 2007 - 08 MADE IN THE REVISED RETURN, OMISSION TO MAKE SU C H CLAIM IN THE ORIGINAL I TA NO.1 01 2 /HYD /201 2 M/S. BILASRAIKA SPONGE IRON INDIA P. LTD., HYDERABAD 4 RETURN APPEARS TO BE A BONA FIDE MISTAKE ON THE PART OF THE ASSESSEE, MORE S O, SINCE NO MATERIAL TO THE CONTRARY HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER. EVEN IF THE ASSESSEE HAS NOT FILED REVISED RETURN, ASSESSING OFFICER IS BOUND TO ALLOW CARRIED FORWARD LOSS OR DEPRECIATION AS PER THE RECORD. SO FILING OF REVISED R ETURN IS ONLY TECHNICAL IN NATURE. IN THESE CIRCUMSTANCES, THE CIT(A) IN OUR CONSIDERED VIEW WAS RIGHT IN DIRECTING THE ASSESSING OFFICER TO ACCEPT THE REVISED RETURN AND TO ALLOW SET OFF OF UNABSORBED DEPRECIATION OF ASSESSMENT YEAR 2007 - 08, AFTER DUE VE RIFICATION THEREOF. WE, THEREFORE, DO NO T FIND ANY INFIRMITY IN THE O R DER O F THE CIT(A) ON THIS ISSUE. WE ACCORDINGLY CONFIRM THE S A ME AND REJECT THE GROUNDS OF TH E REVENUE ON THIS ASPECT. 8. THE NEXT ISSUE COVERED BY GROUNDS NO.6 TO 8 OF THE REVENUE IN THIS APPEAL REL A TE TO DISALLOWANCE OF R S .7,66,392 MADE BY THE ASSESSING OFFICER. 9. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED AN AMOUNT O F RS .15,32,785 TOWARDS COMPENSATION FOR CROP LOSS STATING THAT THIS AMOUN T WAS REQUIRED TO BE PAID AS PER THE O R DER OF THE T A HSILDAR, BALANGAR DATED 18.7.2008 TOW AR DS CROP DAMAGE TO THE AFFECTED FARMERS. THE ASSESSING OFFICER ALLOWED ONLY 50% OF THE SAID AMOUNT OBSERVING THAT THIS AMOUNT P E RTAIN E D TO TWO FINANCIAL Y E ARS, VIZ. 2006 - 078 AND 2007 - 08 AND ACCO RDINGLY DISALLOWED AN AMOUNT O F RS .7,66,392. ON APPEAL, TH E CIT(A) OBSERVING THAT THE LIABILITY HAS CRYSTALISED DURIN G THE YEAR AND THE PAYM E N T WAS MADE ACCORDINGLY, DIRECTED TO ALLOW THE ENTIRE AMOUNT CLAIMED BY THE ASSESSEE IN TH E Y E AR UNDER APPEAL, THUS DELETING THE DI S ALLO W ANCE MADE BY THE ASSESSING OFFICER. 10. AGGRIEVED, REVENU E PREFERRED APPEAL ON THIS ISSUE. 11. WE HE A RD BOTH SIDES AND PE R USED THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE. THE ASSESSING OFFICER DISALLOWED 50% OF THE C OMPENSATION OF R S .15,32,785 OBSERVIN G THAT THE COMP EN SATION ORDERED TO BE PAID BY TH E ASSESSEE PERTAINS TO TWO YEARS, VIZ. FINANCIAL YEARS 2006 - 07 AND I TA NO.1 01 2 /HYD /201 2 M/S. BILASRAIKA SPONGE IRON INDIA P. LTD., HYDERABAD 5 2007 - 08. HOWEVER, AS NOTED BY THE CIT(A) IN THE IMPU G N E D ORDER, TH E RE WERE NEGOTIATION S WITH THE FARMERS FOR THE AMOUNT OF COMPEN S ATION TO BE PAID TO CONTINUE THE RUNNING OF THE FACTORY BY THE ASSESSEE, AND IT WAS ONLY SETTLED VIDE TAHSILDARS ORDER DATED 18.7.2008 AND THE PAYM E N T WAS MADE ON 28.2.2008. THIS SHOWS THAT THE LIABILITY TO PAY THE COMPENSATION IN QUESTION HAS CRYSTALISED ONLY DURING THE PERIOD RELEVANT TO THE Y E AR UNDER APPEAL, EVEN THOUGH THE LIABILITY RELATED TO THE EARLIER YEAR AS WELL. IN THE CIRCUM S TANC E S, THE CIT(A), IN OU R CON S I D ERED OPIN I ON WAS JUSTIFIED IN DIRECTING THE ASSESSING OF FICER TO ALLOW THE ENTIRE AMOUNT OF COMPENSATION PAID IN THE YEAR UNDER APPEAL ITSELF. WE ACCORDINGLY UPHOLD HE ORDER OF THE CIT(A) ON THIS ISSUE AND REJECT THE GROUNDS OF THE REVENUE IN THIS BEHALF. 12. IN THE RESULT, REVENUES APPEAL IS DISMISSED . O RDER PRONOUNCED IN THE COURT ON 9 TH JULY, 2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 9 TH JULY, 2014 COPY FORWARDED TO: 1. M/S. BILASRAIKA SPONGE IRON INDIA P. LTD., C - 404 4 TH FLOOR, AHUJA ESTATE, ABIDS , HYDERABAD 2 . ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 1(3) HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) II HYDERABAD 4. COMMISSIONER OF INCOME - TAX I, HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S